State of the Luxury Home Market
Holds Some Surprises
Aliso Viejo, CA October 11, 2007 – While much of the real estate market struggles to find its balance there is one segment that view the glass as “half full.” According to a recent report by the Luxury Home Council (The 2007 State of the Luxury Home Market Report), the luxury home market is doing well and is projected to continue to grow in the months ahead.
According to Thomas Bodenberg, Unity Marketing’s economic forecaster, “Nearly 60% of luxury consumers feel their financial status will improve in the next twelve months.” A recent study conducted by Coldwell Banker revealed a similar result noting that 56% of luxury homeowners expect the value of their home to increase during the year; 10% expect it to increase significantly.
In an interview with Jim Remley, author of the report, he noted that “demographically most high net worth individuals fit into the 78 million strong ‘Baby Boomer’ market segment and today this massive market segment represents 37.5 percent of the American population. Because Boomers are electing to work longer (most now prolonging retirement to age 70), they are looking ahead to either upgrading their residence or trading up to luxury housing.” A recent comment from NAR’s former Chief Economist, David Lereah, supports this idea, “The leading edge of the Boomer generation is the key to future housing impact.”
What does this all mean to the savvy real estate agent in today’s market? There is a very strong niche in the market where not only is there a desire to move up but there is also the money necessary to make it happen. Does this include the second home market? According the report 39% of luxury home sales are to second home buyers. While many second homes were purchased in the recent past through questionable financing, the true luxury home buyer is more than qualified to make that move. NAR identified these buyers as 44 years old with a median income of $102,200 – purchasing a second home 215 miles from their primary residence.
“Many agents question whether specializing in a certain area of the real estate market is a wise decision. We think it’s a very wise decision as agents that have earned the Accredited Luxury Home Specialist Designation had an average sales volume of just over $7 million in 2006 – nearly 3 times the that of the average real estate agent in the U.S.,” Remley said.
You can download the free Whitepaper from The Luxury Home Council and learn more about the Accredited Luxury Home Specialist designation program at The Council’s website … www.LuxuryHomeCouncil.com.